UPDATE House speaker wants $150 million in tax cuts

Tuesday

LITTLE ROCK — The House speaker proposed Tuesday that lawmakers pass $150 million in tax cuts this session.

Speaker Davy Carter, R-Cabot, announced his proposal to the House Revenue and Taxation Committee, which also voted Tuesday to endorse a proposal to impose a cap on annual growth in state spending.

"There are over $2 billion worth of tax-cut bills that have been filed. They all cannot reach the House floor," Carter said told the panel.

Carter asked the committee to send up to $150 million in tax cuts to the House in increments, beginning with a $50 million package and followed by packages of $25 million each.

"In addition, and separate to that, Mr. Chair, I’m asking for some consideration to be given to a capital gains cut in the context of the health care debate that is ongoing regarding Medicaid," Carter said.

Talking to reporters later, Carter said he believes the capital gains tax is relevant to Medicaid expansion because "at the end of the day, it’s job creators and businessmen and women that are going to ultimately have to pay the ticket for this."

Asked if a capital gains tax cut would have to pass before legislators would support Medicaid expansion, Carter said, "I don’t know. I just think that we’re going to talk about it."

Carter added that he supports overhauling the state income tax code, which he called "unfair."

Carter also made appearances in other committees Tuesday morning, urging lawmakers to get to work on the major issues of the session. To date the session has been dominated by measures to expand gun rights and to limit abortion.

"We’re at halftime of this session, and third quarter starts today," Carter said.

Gov. Mike Beebe said Tuesday that lawmakers will need to show how they propose to pay for the tax cuts.

"I’ve presented a budget, and it’s there for the world to see," Beebe told reporters. "You see where the money is going and where it’s coming from. We can’t even afford my No. 1 tax cut right now immediately, which is the groceries tax cut, and still meet these obligations. So if they’re going to cut any more taxes, they have an obligation to say who they’re taking it from."

Beebe has proposed cutting the state sales tax on groceries from the current 1 1/2 cents to one-eighth cent per dollar spent. The reduction would not take effect until certain budget obligations, including desegregation payments to three Pulaski County school districts and payments on certain bonds, decline by at least $35 million for six consecutive months.

The House revenue and tax panel also gave a "do pass" recommendation on Tuesday to an amended version of House Bill 1041 by Rep. Bruce Westerman, which would limit year-to-year growth in state spending.

The committee previously recommended the original version of the bill, which would have required that total general-revenue expenditures increase from one fiscal year to the next by no more than 3 percent or the average percentage of increase in the gross domestic product over the preceding three fiscal years, whichever is smaller.

The version endorsed Tuesday would provide that annual spending could not exceed the average rate of change of total personal disposable income in the state over the previous five years as reported by the U.S. Bureau of Economic Analysis.

"I believe this is a good bill that will make Arkansas a leader in the country … maybe the top in the country, in budgeting and having responsible management of our state budget," Westerman told the panel.

A motion to endorse the bill carried in an 11-5 vote. All five Democrats on the 20-member committee voted "no."

The bill goes to the House. Westerman told reporters he believes the measure has enough support to pass there.

Gov. Mike Beebe, who called Westerman’s original proposal a bad bill, said Tuesday he still opposes the measure.

"We’ve got a great budget system. … It’s been good for, what, 70 years, and some guy that’s been here a little while wants to change something like that because he doesn’t like what’s going on in Washington. I just don’t see that as appropriate," he said.